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Wednesday, Jun 7, 2023

Legal Drama Gives Way to Lalaloopsy

Twelve years ago, Bratz dolls were the hottest new toy on the market, flying off the shelves during the 2001 holiday shopping season. The curvy dolls went on to bring in billions of dollars for MGA Entertainment Inc., the Van Nuys company behind the toy line. This year, after finally settling a lengthy legal battle with El Segundo-based Mattel Inc. over control of the Bratz dolls, the company is launching an expanded line of its Lalaloopsy dolls. Featuring quirky, colorful outfits and round button eyes, the line expansion, announced in October, has eight new dolls in addition to Lalaloopsy Workshop doll playsets and Lalaloopsy Loopy Hair, which includes dolls with extra-long yarn-like hair. The company grew the Lalaloopsy line further a month later when it announced the Lalaloopsy Babies collection. In February, MGA announced it had partnered with Nickelodeon, owned by Viacom Inc. of New York, to create the animated preschool TV series “Lalaloopsy.” That same month, the company announced revenue of its core toy lines had increased by 23 percent in sales over the past year. Richard Gottlieb, a play industry consultant and founder of New York-based toy industry consultancy Global Toy Experts, said the way MGA is extending its line is a normal way for toy companies to update themselves because of growing competition in the industry. “What used to be the toy industry is now the play industry,” he said. “It can be a toy, app, video game or a playground. Anybody can compete. Never in history has there been as much play available as we have now.” Although Gottlieb says there is more supply than demand, the play industry is dominated by a handful of companies, with MGA in the second tier of suppliers. Its two biggest competitors – Mattel and Hasbro Inc. of Pawtucket, R.I., together control 30 percent of the fragmented toy market, said Jaime M. Katz, a Mattel analyst for Morningstar Inc. in Chicago. In her latest published report on Oct. 16, she noted that MGA is among a group of companies that hold a small share of the domestic toy market. “The next five largest companies in the sector (LeapFrog, MGA, Build-A-Bear, Kid Brands and Jakks) make up about 15 percent when combined, indicating a wide gap exists between Mattel and Hasbro and the rest of the competitors in the industry,” she said. In a recent report published by Port Washington, N.Y. market research firm NPD Group Inc., MGA owns the fourth and fifth top 15 fashion dolls sold in a 13-week period ending Nov. 9. The three top spots are all taken by Mattel, as well as the rest of the top 10 dolls. Hasbro’s dolls ranked No. 13 and No. 14. Dolled up MGA Entertainment began in the mid-1990s by brothers Isaac Larian, the current chief executive of the company, and Fred Larian, both immigrants from Iran. After running import-export businesses and dabbling in consumer electronics, the brothers started the Valley toy company, which originally distributed products for companies such as Nintendo. The company’s big break came in 2001, when the Bratz line broke the mold of the typical doll seen on retailer’s shelves. The dolls sported curvaceous bodies, plush lips and sassy clothes. They were a hit with tween girls who were tired of dressing conservative Barbie dolls. Then came the lawsuit. Mattel alleged MGA had stolen the Bratz concept from a designer who had worked at Mattel at the time. MGA countered that Mattel was using corporate espionage at toy fairs. MGA nearly went out of business due to the litigation’s high legal costs, but stayed afloat with its acquisition of Little Tikes, a line of toys and children’s furniture, in 2006. After an eight-year legal battle, an appeals court awarded MGA rights to the Bratz line plus $137 million for legal fees, although a related $172 million award from a previous ruling was reversed. Today, in addition to Bratz and Little Tikes, MGA also owns the Moxie girlz, Mooshka lines and Lalaloopsy lines. The company did not make an executive available for this story. Consultant Gottlieb said the company has made a strong name for itself due to its traditional, tactile products and appeal to the changing demographics of toy-buyers with its Bratz line. “The hair is Asian, skin tone is Hispanic, lips are African-American and eyes are Caucasian,” he said. “Girls can see themselves in it.” For the future, Gottlieb said that just because MGA is not involved with digital toys now doesn’t mean that the company’s chief executive will avoid them as the market evolves. “For MGA, there is a bright future,” he said. “He is a company owner who is very resilient and aggressive. I would bet on Isaac Larian because of who he is.”

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